The Impact of the New Immigration Policy
- Robin Goodfellow
- Jul 10
- 3 min read
Canada’s New Immigration Policy: A Shift Toward Short‑Term Cooling
In early 2025, the Canadian federal government enacted significant revisions to its immigration policy. These changes form part of the 2025–2027 Immigration Levels Plan, aiming to slow population growth and relieve pressure on strained services such as housing, healthcare, and infrastructure. Permanent and temporary resident acceptance levels, including international students and foreign workers, are seeing major reductions.
A growing number of reports in recent headlines confirms early signs of rent easing in several major centres. It was reported that there is a Canada-wide slowdown in population growth, with just a 20 thousand quarterly increase from January to April 2025, implying a flat growth rate. This marks the eighth straight year-over-year decline in national rent, with May rents down 3.3% to approximately $2,129 CAD.[i] The CMHC’s Mid‑Year Rental Market Update (July 2025) found that advertised rents fell in Toronto, Vancouver, Halifax, and Calgary.[ii] And new data from Rentals.ca / Urbanation indicates that asking rents reached an 18‑month low in January 2025, with a 4.4% annual decline to $2,100 CAD. Ontario posted the steepest drop where apartment rents fell 5.2% in Ontario and 2.6% in British Columbia. [iii] But how concerned should we be?
Historically, immigration, especially via temporary residents and students, has driven rental demand in cities like Toronto, Vancouver, and Montreal. With fewer incoming newcomers, competition for rental units has eased, and key markets have seen rent soften or decline. Analysts point to stabilized vacancies and the first signs of year-over-year rental declines in several provinces.
Immigrants comprise a significant share of Canada’s residential construction workforce. Reduced immigration flows risk slowing new rental development, potentially worsening supply constraints in the medium term, particularly in provinces reliant on labour from temporary and permanent newcomers.
Keep in mind that there is significant regional and segment variation. In other words, as we have pointed out in the past, the resulting rent outcomes vary greatly by city and unit type. For example, major centres like Toronto, Vancouver, and Montreal are experiencing mild rent reductions or plateauing and smaller cities and suburban regions are exhibiting more variable trends depending on domestic migration and local construction. Higher-end and student-oriented rentals are seeing sharper softening; whereas lower‑cost suburbs or markets with strong supply constraints are seeing a less immediate impact.
Longer‑Term Outlook: Demand Won’t Vanish
—Real Estate Remains Local
Despite these early signs of cooling, the immigration reductions are not meant to be permanent. By 2027, modest population growth is expected to resume. More importantly: Economic immigration via Express Entry and other economic pathways remains robust, keeping long-term housing demand in play. Additionally international student pipelines and global labour mobility will likely adjust further depending on U.S. policy and global economic shifts. Finally, provincial-level initiatives, such as programs targeting construction or healthcare labour, may reinvigorate localized demand in Alberta, Saskatchewan, and the Maritimes.
Keep in mind that one of the most important factors to consider is that real estate is a local investment. Changes to federal immigration levels may influence national rental trends, but localized fundamentals matter most. Cities with supply constraints, zoning bottlenecks, or strong domestic job markets may see upward rental pressure even amid slower net immigration. Conversely, places with elevated vacancy and new purpose-built supply may face ongoing stabilization or softening.
Canada’s 2025–2027 immigration policy marks a deliberate shift toward short-term moderation. Permanent and temporary resident intake, including students and workers, are being capped or reduced, with the aim of easing housing, infrastructure, and service pressures.
This shift has already translated into slow or negative rent growth in key urban markets. As documented in recent headlines and reports, cities like Toronto, Vancouver, Halifax, and Calgary have seen multi-percentage-year-over-year rent declines. Supply increases, alongside reduced newcomer influx, are cooling conditions, especially in segments catering to students and recent arrivals.
Nonetheless, the longer-term trend remains firmly upward. Population growth is expected to recover, and immigration will continue to play a central role in Canada’s economic trajectory. In this context, real estate remains inherently local, meaning investor outcomes and renters’s experiences will vary significantly across regions. While demand may ease briefly, supply constraints and local labour-market dynamics will drive divergent rent trends across cities and neighbourhoods.
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